Correlation Between Formosa Sumco and Winstek Semiconductor
Can any of the company-specific risk be diversified away by investing in both Formosa Sumco and Winstek Semiconductor at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Formosa Sumco and Winstek Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formosa Sumco Technology and Winstek Semiconductor Co, you can compare the effects of market volatilities on Formosa Sumco and Winstek Semiconductor and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Formosa Sumco with a short position of Winstek Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formosa Sumco and Winstek Semiconductor.
Diversification Opportunities for Formosa Sumco and Winstek Semiconductor
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Formosa and Winstek is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Formosa Sumco Technology and Winstek Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winstek Semiconductor and Formosa Sumco is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Formosa Sumco Technology are associated (or correlated) with Winstek Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winstek Semiconductor has no effect on the direction of Formosa Sumco i.e., Formosa Sumco and Winstek Semiconductor go up and down completely randomly.
Pair Corralation between Formosa Sumco and Winstek Semiconductor
Assuming the 90 days trading horizon Formosa Sumco Technology is expected to under-perform the Winstek Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Formosa Sumco Technology is 1.69 times less risky than Winstek Semiconductor. The stock trades about -0.1 of its potential returns per unit of risk. The Winstek Semiconductor Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 11,300 in Winstek Semiconductor Co on November 5, 2024 and sell it today you would lose (250.00) from holding Winstek Semiconductor Co or give up 2.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formosa Sumco Technology vs. Winstek Semiconductor Co
Performance |
| Timeline |
| Formosa Sumco Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Winstek Semiconductor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Formosa Sumco and Winstek Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formosa Sumco and Winstek Semiconductor
The main advantage of trading using opposite Formosa Sumco and Winstek Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formosa Sumco position performs unexpectedly, Winstek Semiconductor can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Winstek Semiconductor will offset losses from the drop in Winstek Semiconductor's long position.The idea behind Formosa Sumco Technology and Winstek Semiconductor Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |